Technology a Sticking Point in UPS’s Labor Agreement

Global freight services company UPS and the International Brotherhood of Teamsters (IBT) labor union have a long history of working together, with contracts dating as far back as the 1930s. The number of Teamster UPS staff has increased from a few thousand when the contracts started to more than 250,000 today. Negotiations are underway to initiate another national contract this year, which is the largest labor contract in the U.S.

The Current Contract

The current Master Agreement between UPS and Teamsters Package Division started on August 1, 2013, and expires on July 31, 2018. This contract outlines the following:

Guidelines for the size and weight of packages to protect Teamsters’ work and jobs

Limits the size of UPS SurePost parcels to 10 pounds and less than 3 cubic feet in size, with delivery to residences only

Agrees to a 46-hour workweek with wages compounded from the first general wage increase through the last

Gives employees with 35 years of service or more $3,900 per month in the UPS-IBT pension plan. A 30-year employee gets $3,400 per month plus $100 per year of service up to $3,900

Moves employees in the UPS health care insurance plan to TeamCare, which is trusted by the union and the employees

The two organizations have begun negotiations for the new contract, which covers approximately 250,000 employees. This includes small package and Freight drivers, inside operations sorters and loaders, and dock workers.

Al Gudim, UPS Labor Relations President, states: “UPS and the union have shared many objectives and our intent is to negotiate in an environment of mutual respect. We believe all parties recognize that taking care of our customers with reliable service is the key to maintaining a company that rewards our employees and provides excellent job security.” He also acknowledged the need for UPS to position itself for the rapidly changing industry.

Current Negotiations

UPS, which is the largest private-sector employer in the country, has hinted at what will come in this national contract though its negotiations with local and regional outfits. UPS has already asked for several concessions in these mini-contracts.

The beginning rounds of negotiations for the national contract are receiving a lot of attention due to the demand from the Teamsters that UPS not use drones or driverless vehicles for deliveries. This not only affects UPS but could have important implications for the use of automation in the transportation industry. While the Teamsters’ demands are only the beginning point of the negotiations, this is the first time a large company such as UPS has been met with such requests from a sizeable and influential union such as the Teamsters, which has 1.5 million members.

In addition to prohibiting the use of autonomous vehicles, the union is also asking for other concessions that will improve its members’ work life. For example, it wants UPS to add another 10,000 workers and to cease deliveries past 9 pm.

The Teamsters’ View

The labor union is asking UPS to not replace any of its drivers with autonomous vehicles in an attempt to save the jobs of all of its employees. The Teamsters presented UPS with a document that specifically requests that UPS commit to not using drones, robots, or self-driving vehicles.

The use of automation in place of jobs that humans conduct reflects a concern of many Americans. The use of self-driving vehicles and drones could threaten millions of American jobs. A Pew survey of 4,135 adults in the U.S. last year showed that 72% of respondents were worried about the automation of jobs, and 58% were in favor of government restrictions on the number of jobs companies can replace with machines.

The labor union is also pushing for safeguards that will allow workers to refuse to work in unsafe conditions or on overloaded trucks. The document states: “It is the company’s [UPS] responsibility to hire and maintain a sufficient workforce to service its customers without unreasonably burdening its employees. Management has consistently failed to fulfill its obligation.” This no doubt comes on the heels of a successful holiday season for UPS at the cost of its drivers and hub workers, many of whom worked 70-hour work weeks to get packages delivered on time during this busy period.

UPS’s View

UPS wants a flexible contract that keeps it competitive in the increasingly difficult logistics market. Since the two organizations last struck an agreement in 2013, there have been many changes to the industry, including the explosive growth of the e-commerce sector. To service this sector, UPS wants a contract that will allow for its growth and continued efficient delivery.

In an effort to improve the speed of delivery. UPS began testing drones from the roof of delivery trucks last year and plans to use them to get packages to remote locations that would require a long and costly trip by driver. Mark Wallace, an engineering executive for UPS, estimates a substantial savings if drones are used in rural areas: “The company estimates that it could save up to $50 million per year by cutting a mile off of every driver’s route each day.” This adds up to about 66,000 miles per day.

UPS is not the first carrier to test delivery by drone. Amazon has been transparent in its plans to deliver packages by drone. With the growing delivery volumes and shortage of truck drivers, all carriers are struggling to keep up with demand, leading them to explore new options for getting packages delivered to ecommerce customers.

Even though UPS is only in the testing phase with this technology, it is enough to raise eyebrows with the Teamsters union. Since the FDA still requires drones to remain within the sight of the operator, they would be unable to go very far from a delivery truck.

The negotiation of this new national contract between UPS and the Teamsters will certainly be under scrutiny from the entire logistics industry. Technological advancements will solve some of the challenges that face this industry, but public and regulatory concerns over their impact on jobs will continue to counteract them. Companies will need to work with their labor unions to mitigate the employee issues that come with implementing these technologies.

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